Allied World Assurance Company Holdings (AWH) versus XL Group (XL) Head-To-Head Comparison

Allied World Assurance Company Holdings (NYSE: AWH) and XL Group (NYSE:XL) are both financials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Risk & Volatility

Allied World Assurance Company Holdings has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, XL Group has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Profitability

This table compares Allied World Assurance Company Holdings and XL Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allied World Assurance Company Holdings 12.56% 8.96% 2.42%
XL Group 7.53% 4.88% 1.06%

Institutional and Insider Ownership

86.5% of Allied World Assurance Company Holdings shares are held by institutional investors. Comparatively, 95.3% of XL Group shares are held by institutional investors. 3.2% of Allied World Assurance Company Holdings shares are held by company insiders. Comparatively, 3.0% of XL Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Allied World Assurance Company Holdings and XL Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Allied World Assurance Company Holdings N/A N/A N/A $2.90 16.98
XL Group $11.02 billion 0.92 $1.47 billion $3.08 12.74

XL Group has higher revenue and earnings than Allied World Assurance Company Holdings. XL Group is trading at a lower price-to-earnings ratio than Allied World Assurance Company Holdings, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for Allied World Assurance Company Holdings and XL Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allied World Assurance Company Holdings 0 6 0 0 2.00
XL Group 0 6 4 0 2.40

Allied World Assurance Company Holdings presently has a consensus price target of $39.25, indicating a potential downside of 20.29%. XL Group has a consensus price target of $46.00, indicating a potential upside of 17.21%. Given XL Group’s stronger consensus rating and higher probable upside, analysts plainly believe XL Group is more favorable than Allied World Assurance Company Holdings.

Dividends

Allied World Assurance Company Holdings pays an annual dividend of $0.52 per share and has a dividend yield of 1.1%. XL Group pays an annual dividend of $0.88 per share and has a dividend yield of 2.2%. Allied World Assurance Company Holdings pays out 17.9% of its earnings in the form of a dividend. XL Group pays out 28.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Allied World Assurance Company Holdings has increased its dividend for 3 consecutive years and XL Group has increased its dividend for 4 consecutive years. XL Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

XL Group beats Allied World Assurance Company Holdings on 9 of the 14 factors compared between the two stocks.

Allied World Assurance Company Holdings Company Profile

Allied World Assurance Company Holdings Ltd is a Germany-based holding company. It provides property, casualty and specialty insurance and reinsurance solutions to clients around the world. The Company operates in three segments: North American Insurance, Global Markets Insurance and Reinsurance. The North American Insurance segment consists of the Company’s direct insurance operations in the United States, Bermuda and Canada. The Global Markets Insurance segment includes all of the Company’s direct insurance operations outside of North America. The Company’s reinsurance segment includes the reinsurance of property, general casualty, professional liability, specialty lines and property catastrophe coverage’s written by other reinsurance companies. The Company leases space in Australia, Bermuda, Canada, Hong Kong, Ireland, Labuan, Singapore, the United Kingdom and the United States for the operation of its North American Insurance, Global Markets Insurance and Reinsurance segments.

XL Group Company Profile

XL Group plc is an insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises. The Company operates through two segments: Insurance and Reinsurance. The Company’s Insurance segment is organized into four product divisions: Global Casualty (Casualty); Global Energy Property, & Construction (EPC); Global Professional (Professional), and Global Specialty (Specialty). Its insurance operations provide insurance policies for corporate risks that may require large limits, use of a captive insurance company and the need for a program of locally issued policies. The Reinsurance segment provides casualty, property risk, property catastrophe, specialty, and other reinsurance lines on a global basis with business being written on both a proportional and non-proportional treaty basis, and also on a facultative basis.

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